We are an investment crowdfunding program that promotes the opportunity for North Carolina residents to invest in securities offered by North Carolina based businesses trying to raise capital under the NC PACES Act.
Yes, this is real investing that can produce a real return. Whereas pledge-based crowdfunding (like Kickstarter) allows you to contribute money for perks (t-shirts, discounts on goods, etc.), investment crowdfunding allows you to invest in securities that could provide a return on your investment. The two most common investment types include revenue share agreements and equity ownership. In both cases, perks can be offered as well to make offerings more appealing but every offering is unique, so be sure to review the terms of each security in its entirety to understand the risks.
Investment crowdfunding allows all NC residents to support companies they love. Prior to North Carolina adopting the NC PACES Act, only “accredited” investors (the rich folks) were able to invest in securities offered by private companies. Now, “everyday” or “non-accredited” investors can also participate. Whether they choose to support a company’s mission, the owners or management team, offerings in a certain geography, or affinity groups (women-owned, minority-owned, veteran-owned), investment crowdfunding can be an exciting and interesting way to invest and potentially diversify an overall portfolio.
Yes, as with any investment, there are risks in companies not succeeding and/or your stake in a company not producing a return (i.e. – you lose your money). Start-ups and early-stage companies are particularly risky so you should only invest what you can afford to lose.
North Carolina based companies that are issuing investment crowdfunding offerings are summarized on the INVESTinNC home page. From there, potential investors can learn top-level information about a company and click through to the regulated, FundingStack portal to see the complete offering package, including the disclosure document, business plan, and security agreement. If a potential investor decides to invest, they must prove their North Carolina residency (a requirement of the NC PACES Act), electronically sign the required documents, and complete the investment via ACH payment or wire transfer.
Under the NC PACES Act, any investor that lives in North Carolina can invest up to $5,000 per year, per company. North Carolina based accredited investors, as defined by federal law, can invest any amount in any number of offerings.
Investment dollars are held in escrow through a registered escrow agent until the minimum investment amount (defined in the offering) is met. If an issuing company does not meet its minimum goal, 100% of investment dollars are returned to investors upon the close of the crowdfunding campaign (a date also defined in the offering).
Once the minimum is met, the investment dollars are transferred to the issuing company for them to begin using as defined in their disclosure documents.
An investor’s potential return is subject to the terms put forth in the disclosure documents presented during the initial investment process. If the security is a revenue share agreement, then returns are based on a certain percentage of gross revenue, generally paid quarterly, beginning once a company has concluded their investment crowdfunding campaign. If the security is some form of equity, the investor owns a stake in that company and may realize a return if the company pays a dividend or has an exit event (transfer of ownership, sale, etc.). However, all offerings are unique so make sure you understand the structure of a potential return before you invest.